Business News Round Up (06/06/2023)
Lending to UK SMEs declines as economy slows
Gross lending to UK-based small and medium-sized enterprises (SMEs) by the main High Street banks declined 18% year-on-year in 2022 to £18.4bn, according to data from UK Finance, a trade association for the UK banking and financial services sector. While the UK economy expanded by 4% in 2022, the last two quarters of the year were stagnant. Indeed, three-fifths of total lending in the year took place in the first six months, while there has been a gradually increasing demand for working capital, such as overdrafts. SMEs have also started to draw on deposits accumulated throughout the pandemic, tapping into both sight and time deposits. Finally, repayments continued to be elevated as businesses pay off the government-backed loans taken out during the pandemic. The decline in SME lending was a consequence of rising economic uncertainty, but also reflected increased competition from specialist and challenger banks accounting for an increasing share of lending.
https://www.thebanker.com/Banker-Data/Banker-Database/Lending-to-UK-SMEs-declines-as-economy-slows
Edinburgh and Glasgow ranked amongst UK’s highest growth cities for real estate
Edinburgh and Glasgow have been identified amongst the UK’s highest growth cities across multiple real estate sectors over the next ten years, according to new research by global real estate advisor, CBRE. The firm’s latest report ‘Which City? Which Sector? Real Estate Prospects Over the Next Decade’ found the two cities were ranked in the top five for major commercial real estate sectors – student accommodation, offices and hotels. The report examined 12 real estate sectors across the 50 largest regional towns and cities in the UK outside of London. To inform its findings, the firm analysed economic drivers such as GDP, employment and income growth, demographic trends and property market data including supply pipeline, local universities, and housing affordability to identify the top cities and sectors. David Smith, Managing Director of CBRE Scotland, commented on the report: “Edinburgh and Glasgow have once again shown their strength as top cities for investment and growth, which is unsurprising given their strong demographic and economic fundamentals, and projected growth over the next decade. Aberdeen has also achieved notable rankings. There’s a real opportunity for investors looking at opportunities in Scotland, and we’re anticipating significant investment activity for our largest cities in the next few years.” Edinburgh is the third city on CBRE’s list for growth in the student accommodation sector, just behind Manchester and Nottingham respectively. Glasgow is fifth on the list behind Bristol.
British SMEs offered innovative finance solutions amid cost pressures
Extreme pressures of inflation, soaring cost of living, and escalating energy expenses have emerged as formidable challenges for Small and Medium-sized Enterprises (SMEs) in the UK. These economic factors have amplified operating costs, diminished consumer purchasing power, and created hurdles in securing necessary financial support. The fact that SMEs can turn to business process outsourcing when they cannot afford to hire more employees to do the jobs is a huge comfort for them. Not just that, when debt collection seems to be a major hurdle for up-and-coming businesses, many of them rely on bpo collections for improved cash flow. Despite the formidable challenges, the resilient spirit of startups continues to thrive, positioning them favourably within the ever-evolving UK business landscape. With government-backed and third party loans, as well as incentivized programs focused on backing SMEs, the UK economy continues to foster an environment where relatively small businesses can seize opportunities, promising a future that brims with innovation and growth.
Manchester ‘UK’s leading growth city’
Manchester takes the top spot as the UK’s leading growth city across multiple sectors according to a report which looks into growth prospects for a range of real estate sectors across the 50 largest regional towns and cities in the UK. In CBRE’s ‘Which City? Which Sector? Real estate prospects over the next decade’ report, the city was ranked first in offices, urban logistics and self-storage, student accommodation, multi-family housing, single family housing and was second only to Oxford and Cambridge in life sciences. Findings were informed by economic drivers (including GDP, employment, and income growth), demographic trends and property market data such as supply pipeline, local universities and housing affordability. The top 10 performing cities and growth sectors were identified. John Ogden, managing director – North at CBRE, said: “When identifying key growth markets for office real estate, economic and demographic factors are fundamental. Manchester features top in CBRE’s rankings, partly because it is expected to benefit from the strongest GDP growth. The size of the talent pool is another key factor used when forecasting office demand and Manchester is ranked first for growth in working age population and office employment.” Supply factors are also key when considering a market’s ability to support future demand. In the flight to quality office space, CBRE expects pre-letting of development space to continue. 29% of space under construction is already pre-let or under offer in eight of the top ten markets where CBRE tracks pipeline data.